Commuted sum: what it means in planning

A commuted sum is a one-off payment a developer makes to the council in place of providing something on the site itself: affordable housing, open space, or the long-term maintenance of a road or drainage feature the council is about to adopt. It is secured through a section 106 planning obligation, or through a highways agreement where the payment covers future maintenance. The money is not a fee for the permission, and it cannot lawfully be treated as one.

If you are reading an application as a neighbour, a parish councillor or a junior officer, the commuted sum is usually buried in the heads of terms near the end of the committee report. That is the part to read twice.

Where the payment sits in law

Section 106 of the Town and Country Planning Act 1990 allows a council to enter an agreement, or accept a unilateral undertaking from a landowner, that restricts the use of land, requires operations to be carried out, requires the land to be used in a specified way, or requires a sum to be paid. A commuted sum uses that fourth limb. The obligation runs with the land, so it binds whoever owns the site later.

Regulation 122 of the Community Infrastructure Levy Regulations 2010 then narrows what the council may ask for. An obligation can only be a reason for granting permission where it is:

1. necessary to make the development acceptable in planning terms
2. directly related to the development
3. fairly and reasonably related in scale and kind to the development

Those are statutory tests, and a council that fails them has taken an unlawful obligation into account. The pooling restriction that used to sit in regulation 123, which stopped authorities from funding one item of infrastructure from more than five obligations, was lifted on 1 September 2019. Councils can now pool freely, which is why contributions towards a single park or junction improvement appear far more often than they once did.

Highway commuted sums work differently. Under sections 38 and 278 of the Highways Act 1980, a highway authority that agrees to adopt a new street, or works within an existing one, may ask for a payment covering the extra maintenance burden it is taking on. Block paving, street trees, an attenuation basin or a pumping station all cost more to maintain than a plain bitumen carriageway, and the sum covers that difference over a stated period.

What usually triggers one

Off-site biodiversity net gain deserves a note, because it is often described loosely as a commuted sum and it usually is not. Under the Environment Act 2021 regime, off-site units are bought from a landowner who registers the habitat, and the arrangement is secured by a section 106 agreement or a conservation covenant. Statutory credits sold by the government are the last resort. If you want the mechanics of how those units are counted, the piece on biodiversity units covers the arithmetic.

How the figure is worked out

Almost every council with a settled approach publishes a formula in a supplementary planning document. The typical open space calculation multiplies the number of dwellings by an assumed occupancy for each house size, then by a rate per person for provision and a further rate for maintenance over a set number of years. Affordable housing formulas are more contested, because they usually depend on the difference between open-market value and the price a registered provider would pay.

Figures are indexed. Most agreements peg the sum to a published construction cost index between the date of the agreement and the date of payment, so the amount that eventually lands is not the amount in the heads of terms. Check the current schedule on the council's website rather than a copy circulated with an earlier application.

An illustrative example

Take a scheme of eight houses on a tight urban plot, where the adopted standard asks for on-site amenity space the site cannot deliver. The council's SPD sets an occupancy figure for each dwelling size and a rate per person towards improving existing open space within walking distance. The officer multiplies out the eight units, applies the rate, adds a maintenance element, and recommends an off-site contribution towards a named park about 600 metres away.

Test that against regulation 122. Necessary, because the adopted standard would otherwise be breached. Directly related, because the future residents are the people who will walk to that park. Fairly and reasonably related in scale, because the sum is derived from the occupancy of these eight houses and nothing else. This worked case is illustrative; no two authorities use identical rates.

Where the term gets misread

A commuted sum is not the Community Infrastructure Levy. The levy is a charge per square metre of new floorspace, set out in a charging schedule, calculated by formula and not negotiable. A commuted sum is negotiated, specific to the scheme, and spent on the thing the obligation names. Many sites pay both, and the council has to be able to show it is not charging twice for the same item.

Nor does the money reach a parish or town council automatically. The levy carries a neighbourhood proportion that must be passed down. Section 106 money does not, unless the agreement itself says so.

The third misreading is the most common at committee. Objectors sometimes describe the payment as the applicant buying permission. Regulation 122 exists precisely to stop that, and an inspector will disregard an obligation that fails the tests. If a contribution is offered for something unconnected to the scheme, that is a point worth making in writing during the consultation period.

Most agreements also contain a clawback clause. If the council has not spent the money on the stated purpose within a period, often five or ten years, it goes back to the payer with interest. Councils publish annual infrastructure funding statements showing what they collected and what they spent, which is the quickest way to check whether a fund is actually being used.

Terms that sit close to it

An aftercare condition does a similar job through a different instrument: it binds the applicant to maintain something, rather than paying the council to maintain it, and the distinction between the two routes is set out in the note on aftercare conditions. A unilateral undertaking is a section 106 obligation given by the landowner alone, common on appeals where the council will not sign. A section 278 payment covers works to an existing highway, and a section 38 agreement covers a new street being adopted.

Mitigation payments in nutrient catchments are their own animal, priced by credit rather than by formula, and the nutrient budget explainer sets out how that calculation runs.

What to do when one appears on your site

Find the heads of terms first. They sit at the end of the officer report and list every obligation with its amount, its trigger point and its purpose. Then check three things: which version of the SPD the officer used, how the sum is indexed, and when payment falls due. A trigger tied to starting work on site and one tied to first occupation have very different cash-flow consequences on a small scheme.

If the sum looks wrong, the argument is nearly always about inputs rather than principle. Occupancy assumptions, the floorspace credited for an existing building, and whether an element of the standard is already met on site are the three that move the number. Raise them before the report is written, because officers are reluctant to reopen a calculation in the week before committee.

And if you are objecting rather than applying, write to the case officer setting out which of the three regulation 122 tests you say the obligation fails, and why. A general complaint that the contribution is too small carries no weight. A specific point that a contribution towards a facility two miles away is not directly related to this development carries a great deal.

Working out which supporting documents a scheme needs is a separate job from working out what it will pay. Enter your postcode on PlanScope to see which reports your site is likely to need, or browse all 66 report types by category.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.